Edinburgh Investment Trust Half Yearly Report - Flipbook - Page 30
28 / OTHER INFORMATION FOR SHAREHOLDERS / THE EDINBURGH INVESTMENT TRUST PLC
GLOSSARY OF TERMS AND ALTERNATIVE PERFORMANCE MEASURES / CONTINUED
GROSS GEARING (APM)
This reflects the amount of gross borrowings in use by a company and takes no account of any cash balances. It is based on
gross borrowings as a percentage of net assets.
Page
Unsecured Senior Loan Notes – debt at fair value
29
Gross borrowings
Net asset value – debt at fair value
3
Gross gearing
30 September
2023
£’000
31 March
2023
£’000
67,966
78,253
a
67,966
78,253
b
1,173,983
1,181,091
c = a/b
5.8%
6.6%
NET GEARING OR NET CASH (APM)
Net gearing reflects the amount of net borrowings invested, i.e. borrowings less cash and cash equivalents (incl. investments in
money market funds). It is based on net borrowings as a percentage of net assets. Net cash reflects the net exposure to cash
and cash equivalents, as a percentage of net assets, after any offset against total borrowings.
30 September
2023
£’000
Page
Unsecured Senior Loan Notes – debt at fair value
Less: cash and cash equivalents
Net asset value – debt at fair value
Net gearing
67,966
78,253
(20,307)
(22,362)
a
47,659
55,891
b
1,173,983
1,181,091
c = a/b
4.1%
4.7%
19
Net borrowings
3
31 March
2023
£’000
LEVERAGE
Leverage, for the purposes of the UK AIFM Directive, is not synonymous with gearing as defined above. In addition to
borrowings, it encompasses anything that increases the Company’s exposure, including foreign currency and exposure gained
through derivatives. Leverage expresses the Company’s exposure as a ratio of the Company’s net asset value.
Accordingly, if a Company’s exposure was equal to its net assets it would have leverage of 100%. Two methods of calculating
such exposure are set out in the AIFMD, gross and commitment. Under the gross method, exposure represents the aggregate
of all the Company’s exposures other than cash balances held in base currency and without any offsetting. The commitment
method takes into account hedging and other netting arrangements designed to limit risk, offsetting them against the
underlying exposure.
NET ASSET VALUE (NAV)
Also described as shareholders’ funds, the NAV is the value of total assets less liabilities. Liabilities for this purpose include
current and long-term liabilities. The NAV per share is calculated by dividing the net asset value by the number of ordinary
shares in issue (excluding shares held in treasury). For accounting purposes assets are valued at fair (usually market) value and
liabilities are valued at amortised cost (their repayment – often nominal – value). An alternative NAV with debt at fair value,
values long term liabilities at their market (fair) value and is shown below.
NET ASSET VALUE (NAV) – DEBT AT PAR
The NAV with debt at par recognises the value of the debt liability as the nominal amount that will be repaid at maturity. For
the £120m Unsecured Senior Loan Notes, this recognises a liability of £120m. This is the basis used in the preparation of the
Condensed Balance Sheet on page 19.